Evan Shaver, senior director/strategy of Frito-Lay's Growth Ventures unit – a division of PepsiCo's snacks arm charged with tapping new pockets of growth – discussed this topic at the IRI Summit 2014 in Kissimmee, Florida.
He reported that products falling under the "discovery brand" banner were fast-growing, frequently owned by small- or mid-sized enterprises and had seen significant gains in sales and distribution in the recent past.
Frito-Lay's analysis of this area suggested several trends were collectively enabling this trend to take root, from the distinctive tastes and preferences of millennials to dramatic shifts in technology.
"We knew that there were certain characteristics about the world that are different now than they were 20 years ago that allowed this thing to happen – one being the new economy that allows people to start something on Facebook," he said.
"We know there are manufacturers out there that willing to create everything for you, so you can outsource every single part of your value chain if you want." (For more, including why acquiring these brands may be better than developing them in-house, read Warc's exclusive report: How Frito-Lay is entering the world of "discovery brands".)
Speciality retailers like Publix and Trader Joe's also provide a route to market for these offerings, with mass-market chains now taking greater notice, too.
"If you're a little small player … and get into one customer like a Whole Foods or a Costco or whatever else, they're going to give you a chance," said Shaver.
"And if you do well, then it starts to cascade pretty quickly. And that's something that five, ten, 15 years ago you couldn't do."
Frito-Lay's analysis focused primarily on the food and beverage industries – where brands from Blue Diamond Almonds to popchips and Amy's have all made headway – but this idea is applicable to other sectors, too.
An example is Dollar Shave Club, the online-only subscription service for razors and blades. Thanks to an entry-level price of $1, and hugely popular viral videos, the company has rapidly gathered momentum.
While major manufacturers might be tempted to copy or buy "discovery" brands, Shaver warned that retaining the authenticity and spirit of these products would be vital to achieving success in such cases.
Data sourced from Warc